Borealis Gets a Dividend

You will recall that Borealis is divided into 5 million shares and that it owns 5 million shares in each of its subsidiaries, such as Roche Bay Mining, which is divided into about 7.5 million shares.

If there is a 30 mph head wind and Julie had three times as many marbles as Peter when they started out at 180 mph, how many shares of Roche Bay does Borealis effectively Own?

That’s right! Five million! About two-thirds of the total.

So the latest is that a little Canadian mining outfit called Advanced Explorations (whose own stock – symbol AXI on the Vancouver stock exchange [oh, stop laughing] – had been suspended from trading until this deal was complete) announced that it has raised $10 million or so to fund its initial work commercializing the Roche Bay iron ore holdings – for which large offtake agreements are already in hand, if we can produce the ore.

AXI, which had closed months ago at 31 cents (Canadian) when the trading stopped reopened yesterday on this news and closed at $1.50 (Canadian) on volume of a little more than 1 million shares.

As part of the deal, AXI acquires a big chunk of Roche Bay . . . but also gives Roche Bay 8 million warrants to buy AXI stock at 35 cents . . . and Roche Bay yesterday announced that it would be giving a dividend of half on one of those warrants (called ‘share purchase rights’) for each share of Roche Bay held.

Bueller? Bueller?

Well, since Borealis owns 5 million Roche Bay shares, and Roche Bay is paying out half an AXI warrant for each one, how many chucks could a wood chuck chuck if a wood chuck could chuck wood?

Answer: Borealis gets 2.5 million warrants, with a current intrinsic value of $1.15 each (namely, the $1.50 you could sell the stock for yesterday, minus the 35-cent exercise price of the warrants).

So, if one assumes the AXI stock will stay at $1.50 – a big assumption, although of course it could also go higher – then these 2.5 million warrants are worth $2,875,000 (Canadian).

Could that be enough to help fund WheelTug and some of the other promising technology?

Borealis remains a wild speculation; but with this deal closing, the hoped-for iron ore bonanza comes a step closer . . . and a bit of seed cash for WheelTug (and for some of the other hoped-for technological breakthroughs) may become available this October, when the restriction on selling the warrants is lifted.

A lot of you are – rightly – skeptical of Borealis. But the company is certainly far ahead of where it was eight years ago, when we started this nutty thread. The plane moved. Delta has signed on to try to retrofit thousands of jets. Crews are drilling core samples up in the subArctic.

You never know. Three years from now, our iron ore ships may have come in, and 737s could be pushing back from the gate on their own power.